The latest in an ongoing iPad trademark dispute in China comes as Shenzhen-based Proview claims a small victory in its pursue of a $2 billion compensation from Apple over the iPad moniker in China. According to a report filed by The Associated Press, Proview’s lawyer Xie Xianghui told the media Monday that the Intermediate People’s Court in Huizhou ruled last Friday that local distributors should stop selling iPads in the country.

Previous reports declared that commercial authorities in more than 40 Chinese cities were removing the device from store shelves. Apple appealed to Guangdong’s High Court against an earlier ruling in Proview’s favor, stressing in today’s statement its case is still pending in mainland China. It should be noted that Hong Kong’s and Mainland China’s legal systems are not very much alike.

PCWorld followed up with an update and said Apple will sue Proview’s lawyers and bosses for “defamatory statements.” Folks familiar with Apple’s letter to Proview claim it reads: “It is inappropriate to release information contrary to the facts to the media, especially when such disclosures have the effect of wrongfully causing damage to Apple’s reputation.” The document is embedded below.

Once a well-known display maker, Proview is now strapped for cash and recently filed for bankruptcy. The company maintains it first used the iPAD moniker, which stands for “Internet Personal Access Device,” for its iMac-like computer dated back to 2000.

Apple spokesperson Carolyn Wu today re-iterated that Apple purchased from Proview’s Taiwanese affiliate in 2009 the worldwide rights to the iPad trademark in 10 different countries for about $55,000. The company is accusing Proview of not honoring that agreement, with Wu noting that “Proview refuses to honor their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter.” According to a Hong Kong court ruling from last July, Apple founded a United Kingdom-based company to snap up rights to the iPad trademark in various markets without revealing Apple was the purchaser.

However, a mainland China court ruled in December that Proview was not bound by that sale, opening doors for Proview to threaten a country-wide ban on iPad imports and exports in China. Coincidentally, Apple pulled iPad from the Amazon China online store, because Amazon’s Chinese arm is apparently not the official iPad distributor. Proview chairperson Yang Rongshan made it clear,“If we are not compensated properly, then Apple doesn’t use the iPad trademark in mainland China.” That being said, Proview CEO Yang Long-san toldReutersit will be difficult to carry out such a ban due to the sheer size of the market and “because many Chinese consumers love Apple products.” Thus far, Chinese authorities in Mainland China have not shown willingness to start a ban.